Thursday, February 24, 2011

AU$18 million or about US$18.1 million at the current exchange rates. That’s how many Australian dollars some 226 plus Aussies owe BMW’s unimaginatively named financial arm "BMW Finance". The Bavarian automotive giant is now perusing bankruptcy proceedings against these persons in Australia’s Federal Magistrates’ Court in an effort to recoup the debt from hundreds of unpaid car loans.

It’s all rather depressing, really, especially in the aftermath of the Global Financial Crisis. Take one man who bought an AU$80,000 Lexus on credit shortly before he lost his AU$110,000 job. Or the woman who signed her name on a car loan for her and her husband, only to have him leave her and get stuck with the debt. "They repossessed the car, but they still want [AU]$25,000. I don't know what to do,” said the 34 year-old.

That the woman earns just AU$36,000 a year is of no concern to BMW Finance. Peter Malone, a bankruptcy expert at CRS Warner Kuegel told the Sunday Herald Sun newspaper that creditors could, through a bankruptcy trustee, seize many of a debtor’s assets including their home, cash and shares.

Even if the car is repossessed or sold on, debtors still owe on the shortfall which can sometimes be big money. In Australia, one can be made bankrupt over as little as AU$5,000. Most of the claims the Herald Sun inspected fell into the AU$30,000 plus category, with one debtor owing a whopping AU$190,000.

It just goes to show that that old saying still stands up today, “They that dance must pay the fiddler.” Though in retrospect, why anyone would want to dance to a AU$190,000 tune is beyond my comprehension...